10/12/2011

The London Stock Exchange’s 100 largest companies have thousands of subsidiaries based in international tax havens, an investigation by a development charity has found.

The report by ActionAid found FTSE 100 companies have more than 34,000 subsidiaries and joint ventures and a quarter of these – over 8,000 – are in jurisdictions ‘that offer low tax rates or require limited disclosure to other tax authorities’, reports the Guardian, which covered the story.

According to the report, in the past many FTSE 100 companies have failed to conform to UK laws that require them to list their subsidiaries and where they are registered with Companies House.

As a result of a formal complaint made by ActionAid to Companies House, along with a subsequent investigation by business secretary Vince Cable, the report is the first time the full list has been collated.

Analysis by ActionAid found ‘that 98 of the FTSE 100 companies use tax havens, with only Fresnillo, a Mexican-based mining company, and Hargreaves Lansdown, a Bristol-based financial services group, declaring no offshore subsidiaries’.

The largest number of tax haven companies belong to the banking sector, the UK’s ‘big four’ banks — HSBC, RBS, Barclays and Lloyds – have a total of 1,649 subsidiaries between them.

There are legitimate reasons for multi-nationals to base subsidiaries in countries around the world — the banks say they are global businesses with local operations in dozens of countries — which in itself is not evidence of tax avoidance.

But campaigners say the investigation reveals the need for stricter regulation to stop global firms from getting away with tax avoidance.